Many hoping Obama will give hints on the thorny topic of tax reform

How strongly will the White House push for tax reform in the coming months? Lawmakers, congressional aides and other interested parties are looking for hints in Tuesday’s State of the Union address.

President Obama has sounded open to trying to tackle tax reform of late, with White House officials saying he has called the issue a priority. But some in Washington also question whether the president will want to press too hard on such a potentially thorny topic, especially as he also looks to secure a second term.

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“It’ll be a really big clue about how he wants to proceed,” Caroline Harris, chief tax counsel for the U.S. Chamber of Commerce, said about the president’s speech.

In recent weeks, tax reform has been prominently discussed as an issue where Republicans and Democrats could worth together. Administration officials and lawmakers on both sides of the aisle have said they would like to see a tax system that encourages economic growth and investment, and there appears to be general agreement that rates could be lowered and loopholes filled.

But officials from both parties have also cautioned that an overhaul of the nation’s tax codes would be a complicated – and timely – process, with possible hang-ups on issues like revenue collection and whether to deal with the corporate and individual rates at the same time. Rep. Dave Camp (R-Mich.), the chairman of the House Ways and Means Committee, said this week not to necessarily expect a bill this year.

All that said, former Rep. Dan Maffei (D-N.Y.), who is heading up a project on corporate tax reform for the centrist Democratic think tank Third Way, said that, comparatively, those challenges didn’t sound all that daunting.

“In a lot of ways, I think corporate tax reform is low-hanging fruit,” said Maffei, who has also served as an aide to the House Ways and Means Committee. “What I’d like to see is some sort of sense that the president is going to take a leadership role in really trying to propose this and work with the Republican leadership in Congress to get something done.”

At a Ways and Means hearing on Thursday, Rep. Sandy Levin (D-Mich.), the committee’s ranking member, hit on that same theme, saying that tax reform “will require leadership from the executive, which I am sure will be forthcoming.”

Needless to say, the administration is keeping a lot of the details about the State of the Union to itself. At a Friday event at Georgetown Law Center, Jason Furman, deputy director of the National Economic Council, said that “if you think you’ve heard anything new, interesting or lets you know what is or is not in the State of the Union, then either I made a mistake or, more likely, you misheard.”

But there certainly are signs that the administration is moving ahead on tax reform.


For the second consecutive Friday, Treasury Secretary Timothy Geithner convened a meeting on corporate tax reform, this time with academics and think tank officials. And Furman said Friday that the tax code could certainly be improved and reiterated that Obama would be interested in revenue-neutral reforms that simplified the tax code and increased investment in America.

Given those and other statements from the administration, some on Capitol Hill said they would try not to worry about how much the president discusses tax reform on Tuesday, especially given the number of topics bound to be brought up.

“It would be very unlikely for them to outline a very specific or 12-point-plan for tax reform,” a Senate Democratic aide said. “I wouldn’t say all of the tax reform debate is riding on this. There’s a long period ahead for the White House to weigh in, and that they’ve already weighed in so early is significant.”

The president’s choice of Jeffrey Immelt, the chief executive of General Electric, to be his top outside economic adviser also encouraged some who believe tax reform could be part of a larger effort to, as Obama put it Friday, “put our economy in overdrive.”

Immelt, who will head the newly formed Council on Jobs and Competitiveness, hinted at what tax reform could bring to the economy in a Washington Post op-ed published Friday, writing that “a sound and competitive tax system and a partnership between business and government on education and innovation in areas where America can lead, such as clean energy, are essential to sustainable growth.”

Still, with differences of opinion already starting to emerge in the debate – the chief executive of Procter & Gamble on Thursday downplayed the need for a reform package to be at first revenue-neutral – those interested in tax policy are hoping the president can give the debate more direction on Tuesday.

“There’s no question that reforming the tax code is important to economic growth and to job creation,” a Senate Republican aide said. “The question is how much of a priority it is for the administration, what shape it will take and whether they are looking at wholesale reform.”